Anthem to Buy Cigna in $54 Billion Deal

Anthem Headquarters

Image courtesy of Anthem Inc

Anthem to Buy Cigna in $54 Billion Deal
| published July 24, 2015 |

By Thursday Review staff

Anthem Incorporated, already one of the largest providers of health insurance in North America, has announced that it will buy Cigna Corporation in a deal worth more than $54 billion. The merger of Anthem and Cigna would create the nation’s largest medical and health insurance companies by both assets and customers.

Both companies have said that the merger will help to reduce costs through streamlining and internal efficiencies, and also gives its customers the advantage of a larger insurer able to leverage and negotiate patient-friendly pricing with doctors and medical facilities.

If approved by federal regulators and Congress, Anthem would pay Cigna shareholders $183.36, or $103.40 in cash and 0.5 in Anthem shares in exchange for Cigna shares. The massive deal shatters a record merger just proposed weeks ago by Aetna to buy Humana for $37 billion. Analysts say that the mergers between insurance giants will likely continue as an after-effect of a recent Supreme Court ruling regarding the Affordable Care Act—an outcome which insurance companies were watching closely for its huge impact on health insurance and pricing structures.

Consumer advocates immediately worried that the pace of insurance mergers will shatter competitive models—part of the role the ACA was to encourage—and will eventually lead patients and consumers into fewer choices. As with the Aetna-Humana merger, announced earlier this month, wary regulators will want to understand how the corporate marriages will impact pricing, especially its potential to Medicare patients.

But federal regulators and members of Congress will almost all want to evaluate the merger’s enormous impact on the millions of employees who depend on self-insured plans through major companies. There are only four insurers who provide that service now, but if the merger between Anthem and Cigna is approved, that number will drop to only three, a shift which some business analysts say may be too much for Washington regulators to swallow.

Anthem, which is based in Indianapolis, Indiana, is a major umbrella corporation which includes much of the Blue Cross Blue Shield health and insurance network in 35 states, as well as dozens of other subsidiaries. Anthem currently has more than 37,000 employees.

Related Thursday Review articles:

Aetna Offers $37 Billion for Humana; Thursday Review staff; Thursday Review; July 3, 2015.

China May be Behind Anthem Cyberattack; Thursday Review; February 6, 2015.